1. The company has 60,000 bonds with a 30-year life outstanding, with 15 years until maturity. The bonds carry a 10 percent semi-annual coupon, and are currently selling for $874.78.

2. You also have 100,000 shares of $100 par, 9% dividend perpetual preferred stock outstanding. The current market price is $90.00.

3. The company has 5 million shares of common stock outstanding with a currently price of $17.00 per share. The stock exhibits a constant growth rate of 10 percent. The last dividend (D0) was $.65.

4. The risk-free rate is currently 6 percent, and the rate of return on the stock market as a whole is 13 percent. Your stocks beta is 1.22.

5. Your firm only uses bonds for long-term financing.

6. Your firms federal + state marginal tax rate is 40%. (Ignore any carryforward implications)

Depreciation Schedule Modified Accelerated Cost Recovery System (MACRS)
Ownership Year	5-Year Investment Class Depreciation Schedule
1	20%
2	32%
3	19%
4	12%
5	11%
6	6%
Total =

Find the costs of the individual capital components:

long-term debt (before tax and after tax)

preferred stock

average cost of retained earnings (avg. of Capital Asset Pricing Model & Gordon Growth Model/Constant Growth Model)